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DOJ Catch Of The Week — Tishman Construction Corp.

This week’s Department of Justice “Catch of the Week” goes to Tishman Construction Corporation. Yesterday, the construction company, one of the largest in New York City, agreed to pay more than $20 million to settle charges of overbilling customers over a ten-year period. In announcing the settlement, U.S Attorney for the Eastern District of New York Robert L. Capers said “Tishman Construction bilked its clients by charging them for unworked time and at rates higher than those bargained for [and thereby] defrauded its clients and abused the trust placed in it to provide construction services on some of New York’s most storied buildings.” See DOJ Press Release.

According to the government, Tishman Construction’s overbilling scheme involved some of New York City’s most notable construction projects over the past ten years, including the World Trade Center Towers One (otherwise known as the Freedom Tower), Three, Four and Seven; the World Trade Center PATH Transportation Hub; the Plaza Hotel renovation; the Javits Convention Center Expansion and Renovation Project; and the Aqueduct Casino in Queens. Starting from at least 1999, Tishman Construction allegedly billed clients for these and other large projects (including government contracting and funding agencies) for hours never worked or for rates not agreed upon. Tishman Construction carried out the scheme by, among other things, padding hours of unworked or unnecessary “guaranteed” overtime; and submitting time for certain foremen who were actually absent for sick days, major holidays and vacation days. The government claims the company also billed clients at wage rates that exceeded those specified in the governing contracts.

Under the deferred prosecution agreement the company entered into yesterday, Tishman Construction accepted responsibility for its fraudulent billing practices and agreed to offer restitution to its clients in the amount of roughly $5.65 million and pay a government penalty of roughly $14.6 million. In addition, the company agreed to certain remedial measures, including the creation of the position of Compliance Director, the adoption of a new Code of Conduct, and the revision of time sheet recording and client billing policies.

Michael Nestor, Inspector General of the Port Authority of New York and New Jersey, joined in criticizing Tishman Construction for what he characterized as the company’s “industry-wide fraud.” He stressed that “government contracting agencies, and private clients alike, deserve to be billed strictly for what they bargained for, not duped into overpaying for gratuitous or phantom services.” This strong sentiment was shared by Diego G. Rodriguez, Assistant Director-in-Charge of the FBI’s New York Field Office: “Over ten years, Tishman Construction improperly billed millions from its clients representing both public and private projects across the New York City area. Today’s restitution settlement of more than $20 million should help make right on a practice so wrong.”

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